Sustaining Innovation in the Millennial Age

Innovation and “growth hacking” consultant explores the forces that drive Millennial Engagement, and the surprising connection to innovation culture.

Last month I hosted a RiseSmart webinar (recording available) in which I explored 5 core factors that drive Millennial engagement.  We ran past the hour as I attempted to answer some AWESOME questions from the audience.  In a series of blog posts, I will address each of these questions in more detail.

In the interim, here’s a quick recap of the webinar for those who missed it:

Recap of Webinar

While advising clients on innovation, I discovered interesting correlations between Millennial engagement and innovation (more to come in my upcoming book).

Given my findings, it is no surprise that many traditional enterprises score low on BOTH millennial engagement and innovation.  And while startups and technology companies “crush it” (as Millennials say), a select group of mature companies also score highly.

So how have some companies figured out how to land on the Best Places to Work list? I’ve identified 5 core characteristics that give these companies an edge with Millennials.

Principles Driving Millennial Engagement

Five Core Principles Driving Millennial Engagement

Achieving the Trifecta: Values, Purpose and Communication

The first question I received on the webinar was one that comes up often.  The question gets to the heart of why startups and founder-led companies consistently out-innovate incumbents.

Question #1 from Audience RiseSmart Webinar

Speaker’s Response

During a company’s annual strategic planning process, leaders should review the company’s mission and identify gaps in delivery. In high growth divisions, where new hires or changing industry dynamics are at play, this purpose alignment exercise should take place frequently.  We counsel our clients to embrace the “what gets measured gets done” philosophy; even in soft skill areas like culture and purpose.

The companies that appeal to Millennials pro-actively cultivate a purpose-filled culture.  Creating an environment that prioritizes excellence (PURPOSE) while remaining nimble, respectful and diverse (VALUES) does not happen by accident. In fact, leading organizations hire de facto Chief Culture Officer(s) to manage and motivate their workforce.

Now here is some potentially devastating news. If a company does not uphold its purpose, the millennial “authenticity” police will issue a warning.  In the worst cases, crusading employees flock to Glassdoor and other social outlets to expose the “truth” about your organization/product.  Consider this a fraud alert on corporate lip-service.

This is the primary reason why startups and technology companies score high with Millennials. Many founders are still tied to their companies, so they infuse purpose and values into every product, hiring decision and marketing message.   Laser sharp focus, coupled with an open, feedback-rich culture allow organizations to build cult-like employee engagement (think Google, Facebook, Hubspot and Airbnb).

Startup management teams are typically generous with information and devoid of bureaucracy (COMMUNICATION).  Low-level employees enjoy high levels of responsibility and accountability.  In turn, employees look forward to all-hands meetings and social gatherings.  Millennial employees garner a sense of pride when their company matches speech with deeds.

Millennials are seduced by high levels of authenticity and trust.  As a result, organizations with strong values, purpose and clear communication are magnets for top talent across all generations. It’s interesting that this finding challenges the stereotype that Millennials lack loyalty and job hop.

… Innovation Bonus

And finally, based on years of consulting innovation-seeking clients, I believe it’s also at this intersection of values, purpose and communication (work/life balance is the cherry on top) where innovation blossoms.  That’s a double win for companies that have adopted our suggested approach—higher millennial engagement AND a culture that supports innovation!

Your Thoughts?

So let’s hear from you: does what I described above sound like the culture at your corporation or startup?  Please share your thoughts on this post.  We would love to read your comments below.  And follow me (Blog, Twitter, Linkedin) to subscribe to this series and be a part of the conversation!

 

Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com) , a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and fundraising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.

Uncategorized
5 Ways Innovative Companies Attract and Retain Millennials

5 Ways Innovative Companies Attract and Retain Millennials

Despite a volatile employment landscape, smart companies are always looking for ways to attract the next generation of talent. Engaging with Millennials, however, requires a strategic approach. Are you prepared?

In this #SmartTalkHR webinar with Lockie Andrews- consultant, Angel/VC/PE Investor, and keynote speaker from Catalyst Consulting, you’ll learn why Millennials are a tremendous talent opportunity—and why they flock to certain companies while avoiding others.  Lockie will lead us through an intriguing discussion on the following topics:

  • The current trends in hiring and employment for startups, and how to leverage these trends to help your organization succeed
  • The five corporate principles that drive high Millennial engagement
  • Examples from leading large enterprises that have created Millennial-friendly cultures (and how they apply to you)

Discover the startup trends that will help your organization succeed, and learn about the principles that drive high Millennial engagement.

Watch a recording of the webinar here:

– See more at: http://www.risesmart.com/resources#sthash.ThlRZaDQ.dpuf

Screen Shot 2016-09-03 at 2.41.56 PM

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, growth hacking, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.  Follow Lockie on Twitter and Linkedin

 

Uncategorized

Why Wal-Mart’s Acquisition of Jet.com Makes Perfect Sense

…and why other traditional enterprises must acquire innovation to stay relevant and competitive.

The retail sector is abuzz about the latest rumor Wal-Mart is acquiring or investing in Jet at a reported $3 billion valuation.

There are increasingly more examples of these “innovation acquisitions”. Incumbents view these money-losing innovators like they are fountains of youth.

Screen Shot 2016-08-05 at 11.36.31 AM

For years, I have been advising traditional retailers/brands to “pair up” with startups. Conditions are ideal for these marriages given the slowdown in venture capital funding and the state of cash-strapped startups.

No company wants to be Blockbuster in a Netflix world.  And well-funded traditional enterprises are feeding internal innovation by pouncing on wounded unicorns.

The strategic benefits to large companies from innovation acquisitions are obvious:

  • Fend off disruption by digital upstarts
  • Address changes in consumer preferences and shopping behaviors
  • Find new growth channels, products and customers
  • Acquire proven technologies and platforms

Of course, long term the preferred route is to transform traditional enterprises into lean innovation machines. However, from time to time, it makes sense to look outside for innovation.

There are three compelling reasons why incumbents like Wal-Mart should buy innovators like Jet:

REASON #1: Innovation is HARD

Building an innovative and entrepreneurial culture in large traditional enterprises is incredibly difficult.  Most innovation initiatives die under the rigid controls that fuel hierarchical organizations.

Even companies that succeed in creating innovative environments run the risk of having their efforts erased during the first downturn or management change.

REASON #2: Innovation is EXPENSIVE

Wal-Mart is undisputedly the heavyweight brick and mortar champ.  Unfortunately despite years of investing billions of dollars online, they have not kept pace with Amazon:

  • 2015 Online Sales were only $14 billion (3% of Total Revenue of $482 billion) as compared to Amazon.com’s $80 billion in Product Sales.
  • Last year, Amazon overtook Wal-Mart in market capitalization, and this year Amazon is 40% larger.
  • Growth on Walmart.com has slowed for six straight quarters.

Screen Shot 2016-08-05 at 11.50.31 AM

An acquisition of Jet is a risky and expensive bet, but it’s a small price to pay for long term growth.

REASON #3: Innovation fuels GROWTH

A recent Street.com article hypothesized potential deal synergies between Wal-Mart and Jet.  Assuming Street.com’s analysis is correct, the complementary nature of their customers and products could be a catalyst for Wal-Mart’s stock price.

Of course, integrating an acquisition target while realizing merger synergies is just as hard as transforming traditional enterprises.  The path of “acquiring versus building” innovation is fraught with risk, and will be an uphill battle for Wal-Mart.

That said, Wal-Mart is one of the few companies with the size and scale to compete with Amazon.

A potential acquisition of Jet.com COULD turn out to be a brilliant win-win for both companies.

And that win-win could be Amazon’s Achilles heel.

Pass the popcorn.

 

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.

 

Uncategorized

How to attract VC funding like the best unicorns?

Q2 2016 VC funding results are in, and the unicorns took the lion share of funding.  Early stage startup funding experienced precipitous declines as the cash crunch continues. 

This post is the second in a series on the state of VC funding and startup performance in the United States. The inaugural post How we know the tech funding bubble has burst? was published in May 2016.

While most people are preparing for summer vacation, young entrepreneurs are preparing for a long winter.

UNICORN FAIRY TALES?

Last Thursday Pitchbook released the 1H 2016 U.S. Venture Industry Report. Second quarter VC investment reached a staggering $22.8B. Not surprisingly, the majority of investment went to mature, late stage startups (many of whom are unicorns valued over $1B).

Screen Shot 2016-07-11 at 12.55.02 PM

The stark reality is that startups falling in the Series D and Late Stage categories represent less than 1% of all U.S. startups (author’s estimate).

Even within this infinitesimal tranche of later stage startups, it is a ‘tale of two cities’ as mega-rounds from super unicorns like SnapChat, Slack and Uber significantly skewed totals. The less obvious point is that ‘almost’ or ‘fallen’ unicorns have had a tough time raising funds. Expect to see more layoffs and pivots among late stage non-unicorns given the frozen IPO market.

THE CREME OF THE CREME

The creme of the top 1% are mature companies that have reached hyper-growth mode. These darlings of the media and VC communities have produced solid results, gained traction and identified a path to profitability. VCs have separated the wheat from the chaff, and lack of funding will force the bottom 1% to pivot, sell or close.

Screen Shot 2016-07-11 at 1.32.10 PM

Mattermark took a closer look at May VC funding results in their report: Venture Capital Cooling Trend: “Wait And See” Mode Continues. When the dust settles and we get under the May/June numbers, we are likely to see continued precipitous declines in non-unicorn investments. Keep in mind, before May, the Series D and Late Stage funding totals were down 20-37% YTD.

And that’s the good news.

THE 99% PERCENT

Back in the real world of startups (2-3 million companies in the US), raising capital is just plain ugly.

Screen Shot 2016-07-11 at 1.33.40 PM

So early stage entrepreneurs, that headwind you feel against your raise is real!

My advisory firm spotted these trends real time while advising startups. The slowdown was particularly pronounced during investor meetings with the HBS Alumni Angels.

A NEW DAWN: REASON HAS RETURNED!

As outlined in our original piece, during the first half of 2016, investors pulled back investment in the overheated market. I mean, perhaps we don’t need the fifth on-demand dog grooming service? Just saying!

So what can entrepreneurs do to successfully raise funding?

Given increased volatility, low interest rates and inevitable surprises (like Brexit), we tell our startup clients the following:

  1. Adapt: The funding environment and investor sentiment have changed. Investors are more cautious and want assurance. This usually means tougher due diligence questions and bigger data rooms. Be prepared for a raise to take 8-9+ months and don’t take it personally.
  1. Spend Wisely: In this market, cash is king. Given the longer raise cycle, startups need 18-24 months of runway. The biggest wildcard is usually marketing spend. Unless a startup is a market leader, throwing cash at consumers with little return on investment will haunt the next raise.
  1. Build, Measure and Learn: Small bets are the best way to stretch capital. Fully embrace lean startup principles and double down where there is traction. Entrepreneurs should prioritize achieving proof points and milestones. The best startups will keep close to customers and actively monitor feedback.

The road ahead for startups won’t be easy. The true irony is VCs have raised humongous war chests; but investments will be made cautiously.

Personally, I’m happy to wave goodbye to growth for growth’s sake. I’ve long felt it odd that there was so little focus on profitability and sustainability. Granted, the “get big quick” model generally works for specific verticals: namely SaaS startups with favorable economics, or platforms that enjoy network effects. However in the consumer and media sectors where I focus, that approach rarely succeeds.

Whether good, or bad, or just long overdue- it’s back to the basics. Entrepreneurs are putting in the hard work to turn innovative ideas into products/services that change the world.

Venture forth and carry on!

 

Follow me on Twitter:  https://twitter.com/lockieandrews

Lockie Andrews is the CEO and Managing Director of Catalyst Consulting, a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and M&A/capital raising. Lockie is also a sector lead for the HBS Alumni Angels of NYC.

Uncategorized

Fashion Tech Sector Lead – Harvard Business School Alumni Angels of New York

 

Interview regarding my new role as the Fashion Tech Sector Lead at the HBS Alumni Angels of Greater New York.

Sector Lead Profile: Lockie Andrews HBS Class of 2000
Why did you volunteer to be Fashion Sector Lead? What is your experience in this area? 

My professional experience has been a blend of fashion and consumer, startup management, e-commerce/digital technologies and venture capital fundraising. Volunteering to be a Sector Lead felt like a natural extension of my skill set and interests. As the head of my own boutique consulting practice, I reserve 20% of my time to work with entrepreneurial ventures, and working in this volunteer capacity allows me to stay abreast of the cutting edge innovations in fashion and tech.

What benefit do you believe HBSAANY has on the startups they work with? Does this go beyond just funding? 

The Harvard community at large offers a very deep and broad network that has proven quite valuable to our portfolio companies. We frequently tap into our network for strategic insights, research, expert opinions and talent to help management teams execute their vision and growth plans. We try to embody the definition of “smart money”. Many of our angels take seats on boards, serve as advisors or follow-up their personal investments with formal venture capital commitments at their funds.

What have you been working on so far within the fashion sector? What are you seeing that excites you? 

Our primary goal is to build awareness about our investor group within the fashion tech community.  In addition to growing our pipeline of high growth startups for pitch night, we want to formalize the fashion tech ecosystem in NYC.  In the coming months we will announce meet-ups for fashion tech startup founders and investors, as well as collaborations with existing fashion tech clubs and the HBS Club of NY Business of Fashion series.  I am personally excited about truly transformative concepts that address the major pain points of consumers and retailers.  Fashion is one of the few industries to completely reinvent its product pipeline each season, however counter-intuitively, the industry has been a laggard in embracing technologies that modernize supply chain, operations and omni-channel retailing.  HBSAANY looks forward to funding future innovations in fashion tech.

Apply to pitch to the HBS Alumni Angels of NYC.

Uncategorized